GOVERNMENT EDUCATION SPENDING AS A MODERATOR OF DIGITALIZATION EFFECTS ON YOUTH EMPLOYMENT

Abstract

This study examines the effects of the digital economy on youth employment in Kazakhstan and whether education expenditure moderates such effects. Two key indicators for digitalization are considered - internet penetration and ICT investment-and its link to the youth unemployment rate. Using data from Kazakhstan over the last two decades, this research carries out correlation analysis and regression modeling with interaction terms to test our hypotheses. The findings confirm that internet penetration increases employment for youth and that this effect is substantially amplified when government spending on education is high. If the investment is low, digitalization stops helping youth employment. A similar pattern goes for ICT investment, but with lesser effects. These results indicate that human capital investments are fundamentally complementary to policies that aim to translate employment gains from a digital economy. The paper locates this finding at the intersection of Kazakhstan’s rapid digital transformation and education reforms and thereby contributes to the literature on support for the youth provided by public education spending. Keywords: Digitalization, Youth Unemployment, Education Expenditure, Internet Penetration, ICT Investment.

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